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Overseeing the bailout: American Recovery and Reinvestment Act of 2009 establishes independent board to oversee spending of stimulus funds on federal contracts

The American Recovery and Reinvestment Act of 2009, commonly known as the economic stimulus package, contains a number of potential opportunities for federal contractors, including tens of billions of dollars in spending to spur investment in Health IT, modernization and energy efficiency of federal buildings, and construction and repair of roads, bridges and other infrastructure. Along with these opportunities, however, the Act continues the recent trend towards increased oversight and scrutiny of federal contracting decisions. In that regard, the Act calls for the creation of a new Recovery Accountability and Transparency Board, which is just one in a growing list of recent measures aimed at increasing oversight and accountability in the use of federal procurement funds.

Sections 1521-1530 of the Act, which became law on February 17, 2009, call for the creation of this new stand-alone Board, known as Recovery Accountability and Transparency Board. The Board will be led and staffed with temporary appointees and will receive administrative support from GSA. The following are some highlights on the newly-created Board:

The Board has $84 million in appropriated funds and will be in existence until September 30, 2013. It will be chaired either by a high-level OMB official or another political appointee at the Assistant Secretary level. Other members of the Board will be ten named agency Inspector Generals (IGs) plus other IGs as appropriate. Staff will be hired as temporary employees with five-year appointments.

The Board shall "coordinate and conduct oversight of covered funds in order to prevent fraud, waste, and abuse." There are also more specific duties that include "auditing or reviewing covered funds to determine whether wasteful spending, poor contract or grant management or other abuses are occurring and referring matters it considers appropriate for investigation" to the appropriate agency IG.

The Board has IG-like authorities to conduct audits and reviews including subpoena authority for documents and "may issue subpoenas to compel the testimony of persons who are not Federal officers or employees and may enforce such subpoenas" consistent with the Inspector General Act.

The Board will issue "flash reports" (items requiring immediate action), quarterly reports, and annual reports summarizing their findings to the President and Congress. Reports will be publicly available on the Board's website, but may be redacted for FOIA exemption and/or Privacy Act purposes.

The Board can also hold public hearings and issue subpoenas. Agency heads must make all officers and employees of the agency available to testify and provide information.

In addition to this Board, Section 1515 of the Act, entitled "Access of Offices of Inspector General to Certain Records and Employees," grants IGs explicit authority to examine records and interview employees of any contractor or grantee which receives funds under the Act.

The creation of the Accountability and Transparency Board is yet another example of the trend of increased oversight of the federal procurement process. Last year, the FY 2008 National Defense Authorization Act established the Wartime Commission on Contracting, which is an entity charged with studying contracting in Iraq and Afghanistan. And in January 2009, the Senate Homeland Security Committee established an ad hoc committee to oversee federal contracting that will be led by Sen. Claire McCaskill.

The Government's expanded investigatory powers and focus on transparency in federal contracting counsels contractors to ensure that their compliance practices and contract administration policies are in order.